With inflation soaring and recession rumors proliferating from every “news” source, I have had several people ask me, “I want to start freelancing full-time, but if there is a recession coming, I feel like I need to stay in my job to keep my paycheck coming. What should I do?”
Job Security is a Myth
More than twenty years ago (crazy to think it has been that long), I landed a creative director role at Fox. It was a landmark moment in my early career and proved to put me on a path for the next couple decades of success.
At the time I thought, “This is it! I have a six figure salary and a director level role with a multi-billion dollar Hollywood studio. I’m going to work here forever!” It was the year 2000 and my future had never been brighter and my job had never seemed more “secure.”
A little over a year later, Fox sold our divisions (Fox Kids and Fox Family) to Disney. Then came the tragedies of September 11, 2001. Then came a major economic downturn and the collapse of the “dot-com era.” Then came layoffs.
My “forever” job at Fox was in jeopardy and it eventually disappeared along with the rest of our Fox Kids and Fox Family team members.
Through this experience I learned that “job security” is a myth. My employment income went from six figures to zero during a brief ten minute conversation with human resources. Poof.
Business Survival Trumps Employee Survival
The loss of jobs was no fault of Fox management for selling or doing a bad job of navigating an economic downturn. In fact, selling and downsizing team members was the exact right thing to do to sustain the business because the long-term health of a business outweighs the short-term sustaining of employee salaries.
I faced this challenge in 2009. The Great Recession hit my agency in October 2008 and by February 2009, after sustaining major financial losses trying to sustain my business, I ended up having to layoff half of my team to help restore financial balance to my business.
No doubt it sucked. I hated doing it. I cried that day. But if I wouldn’t have done those layoffs, my business would have died and completely lost the opportunity to provide job opportunities to more people in the future.
We survived and between the February 2009 and in the years that followed I employed another 40+ creatives before selling my agency in 2015. Had I not kept my business alive all of the future opportunites for people to join my agency team would have died with it.
We don’t know what the future holds. You don’t know. Your clients don’t know. And the people who run the business you work for don’t know either. An economic downturn could require any business to make tough decisions in order to sustain their long-term health. Unfortunately, some of those difficult decisions may have an impact on their ability to employ you.
As I learned early in my career, even high-level jobs with multi-billion dollar Hollywood mega brands don’t guarantee long-term employment or “job security.” Sometimes businesses do what they have to do to survive including selling, layoffs and major pivots that affect their employee’s job “security.”
Job = Single Stream of Income
Part of the myth of “job security” comes from the false perception that the paycheck will always be there. But what if it isn’t? What if global economic circumstances require your employer to make those tough decisions to downsize their business in order to survive?
Most people who are employed have one stream of income, all your money coming from one source. A financial crisis that impacts your employer’s business could make your single stream of income “poof” away to zero.
Freelance = Multiple Streams of Income
In contrast to a single stream of income as an employee, freelancing typically includes multiple clients and therefore multiple streams of income.
From January through October of 2008, my agency had approximately $1.5 million in revenue. The recession hit. It sucked. And in 2009 we billed roughly half of our previous year’s revenue, approximately $750k.
Our revenue got cut in half, but it didn’t “poof” away to zero because we had multiple clients providing multiple streams of income. Enough of those clients kept spending (albeit at lower levels) for me to keep my business alive.
When Should You Start Freelancing?
All that being said, with a possible recession looming, should you start freelancing now? If you’re ready, go for it. And if you don’t feel ready, then stay at your job for now. There are pros, cons and risks that come with each.
Staying at your job may seem like a more secure paycheck, but it comes with the risk of that single stream of income drying up.
Starting on the freelance adventure you’ve always dreamed of may seem risky, but it comes with the benefit of multiple streams of income (multiple clients).
What is right for you? Only you can decide. You don’t know what the future holds. I don’t either. And neither does your employer. All we get is future experiences based on the decisions we make today.
If you have felt ready to go full-time freelance, don’t let recession fears trick you into thinking that staying at your current job is safer. You will take on risks either way. As for me, I have loved multiple streams of income and the flexibility to hustle for opportunities that freelancing (or owning an agency) provide. “I live and die by my sword,” as the saying goes. It would take a pretty spectacular (and likely non-existent) job opportunity to ever get me to take on the risk of working for an employer again.